Real Wealth Society

Wednesday, October 25, 2006

What is the REAL Value of Gold? By James Jaeger

Shouldn't there be A LOT more gold than this? See below or go to

Are they hiding it? If this is "all" the gold there is in the Dept of Treasury, some 11 billion "dollars" worth, wouldn't the TRUE value of an ounce of gold be calculated by establishing the ratio of gold to FRNs and then determining how many ounces of gold should be equal to an FRN?

In other words, we're not interested in knowing how many so-called "dollars" each ounce of gold is "worth" but how many ounces of gold there are out there FOR each fiat FRN in existence.

Using the below data, this would be calculated by:
261,498,899 Oz / $11,041,058,821 = 2.61 X 10 ^ 8 / 1.10 X 10 ^10 = 2.37 X 10 ^ -2 Oz per FRN

Thus each FRN in the US is really only worth .0237 fine troy ounces of silver.

Once we get the number of FRNs and other cash equivalents in circulation in the US, we should be able to calculate the REAL value of gold -- not the bogus value foisted upon us by gov propaganda agencies. It's a simple step to then extrapolate this date to the WW scene, no?

James Jaeger


  • Ok, so your saying there is about 18 million ounces of gold stored. The M3 money supply per US capita is roughly $27000 . This is all cash, deposits, loans, and investments. Since there are 300 million people, we divide that by 18 million and we find that there is 0.06 ounces of gold for each person. Therefore, the real value of gold is 27000/.06 = $450000 . This scares me, I dont know about you. When the fit hits the shan, there wont be enough gold to go around.

    By Anonymous Anonymous, At 1:18 PM  

  • The real value of gold is therefore $450000 US money PER ounce.

    By Anonymous Anonymous, At 1:19 PM  

  • Very interesting.

    However, given that gold is universal and we, at any instance, have relative exchange rates between all currencies (almost always in reference to US dollars) perhaps we should combine the m3 of all fiat in the world and compare it to all gold in the world.

    Take Canada for example-- no gold reserves in their central bank. Does gold then equal infinite Canadian dollars and thus infinity time 80 percent in US Dollars? Technically yes, as paper currency and electronic blips have an intrinsic value of nothing. However their relative value is based on how many there are.

    Does anyone know of a source of info for m3 for multiple countries?

    By Anonymous Anonymous, At 3:40 PM  

  • This is meaningless. The best way to determine the true value of an ounce of gold is to see what it can buy in relation to the fiat FRN. No wait, you can't do that because gold is not money and you can't buy squat with it.

    Offer a man on the street a choice between an ounce of gold or $600 cash and I bet he will take the cash because he can spend the cash whereas he would have to sell the gold first and the value of the gold will be determined by the person willing to buy it.

    All of this speculation over the value of gold as money stems from a fundamental misunderstanding of what constitutes money, which is odd because it is really simple; money is nothing more than a medium of exchange and that medium is whatever the government says it is, be it gold or scraps of paper. And if the government has determined that scraps of colored paper will be money then it has bestowed upon that paper the ability to buy things and store wealth.

    By Anonymous Carl, At 3:50 PM  

  • Carl - it is people's faith in money that makes something money. Not because govt says so. It's pretty obvious govt has abused that faith which means the fiat dollar will not be with us much longer.

    The 450,000/oz number is accurate assuming today's number of FRNs are needed by the economy. The vast majority are not. Only 1-5% which puts the fair value between 5,000 and 25,000/oz.

    By Anonymous Anonymous, At 4:07 PM  

  • Money is whatever the government says it is, faith notwithstanding.

    I have absolutely no faith in the fiat but it's still money, it still spends and it's still considered a store of wealth, all be it depreciating.

    By Anonymous Carl, At 4:20 PM  

  • Money isn't just a medium of exchange as approved by the government. That's a currency.

    Money also performs the function of a store of value and a unit of account. Government issued currency doesn't fully fulfill all or any of these functions. There are jurisdictions and items where even government issued currencies can't perform those functions.

    If government issued currencies was money, there wouldn't be any such thing as defacto currency. The government can pass all the legal tender laws it wants to, but it's the willingness of people to use it that gives it the ability to function.

    The conclusion in the post and the comments about money supply being used to figure out a possible cost for gold is based on the idea that our current unbacked fiat system is an abberation rather than the norm throughout the history of human economic activity. It assumes economic realities that differ from the claims of the moneterists, Keynesians or neo-Keynesains.

    Also, your or my individual faith or lack of faith doesn't make government issued currency money-- it's the aggregate of the entire economy's faith that matters. Not us little dissidents.

    By Anonymous Anonymous, At 4:22 PM  

  • The one who controls the gold reserves during war is the one who pays the military.

    Would a soldier want paper money that might not be good in the future.

    How much is a bill with Saddem's face on it now.

    By Blogger Markangelo, At 11:22 AM  

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